- January 30, 2020
- Posted by: MK Consultus
- Category: Bookkeeping
GST registration is crucial, especially for businesses exporting goods and services, as they can zero-rate their exports. This means they charge GST at a 0% rate, allowing them to claim back the input GST on their returns. It’s important to note that businesses providing GST-exempt supplies cannot claim back input GST. As a business supplying goods or services, you are liable to pay this tax.
- Your taxable period (also known as filing frequency) refers to how often you need to file your GST returns with IRD.
- But before you do so, you need to make sure that you have calculated everything correctly.
- Additionally, there are a couple of visitor taxes for New Zealand, such as the NZETA and IVL, that you will have to pay an upfront cost for.
- It is one of the most progressive regimes in the world, with a wide base and limited exemptions.
- When deciding whether you need to register for GST, always refer to the IRD website or talk to your tax lawyer.
The difference between the output tax and the deductible input tax in each accounting period will be the amount of GST payable by the business to Inland Revenue. A bi-monthly return period is the default filing frequency in New Zealand. However, if a registered person makes taxable supplies of less than $500,000, they may apply to the Commissioner to return GST six-monthly. Conversely, if a registered person makes taxable supplies of over $24 million in a 12-month period, they are required to return GST on a monthly basis.
When filing a GST return, you have to ensure that you make your payment as well. If you fail to do so, late payment and submission will incur some penalty and interest. There are three types of filing frequency in New Zealand, and the options available are monthly, two-monthly, or six-monthly. You may not realise it, but an arrival and departure tax is added to the cost of your flight or cruise ticket to and from New Zealand.
- The purpose is to regulate the market and free trade and ensures standard procedures are followed in business transactions.
- One benefit of voluntary registration is you might be able to claim a GST refund, eg if you have a lot of expenses but not much income.
- In this example, Tim has paid $3,900 worth of GST on the necessary items to run his fishing operation in December.
- When buying products and services, some products’ pricing are exclusive of GST, whereas some other are GST-inclusive.
- Travellers departing on airlines or private craft are charged a Customs levy of NZ$4.52.
You will also be able to claim back the GST you incur on your business expenses. Your GST return is due by the 28th of the month after the end of your taxable period. You must file a GST return for every taxable period, even if it is nil. If you have a business examples of business invoices with a turnover of NZD 60,000 or more in a 12-month period, you are required to register for GST in New Zealand. Some goods and services that are exempt from GST in New Zealand include financial services, residential rents, and some government charges.
New Zealand GST rates
The accounting basis is a framework to figure out which activities should be included in the GST filing period. Yes, non-resident suppliers of remote services must register, charge and account for GST on supplies made to New Zealand residents. The same $60,000 of sales in any 12-month period registration threshold applies. In this more detailed example, John has a net GST payable of $50,850 for the period.
Find the return you need to file
Before we start, we should understand that all GST calculation is relative to the “base” which is the original figure that you have. If you are wanting to add GST, then the base would be the price without GST… Remember to file your GST return by the due date even though you have NIL return. You can always write to IRD and state the filing frequency you prefer if the filing frequency didn’t match you.
GST (goods and services tax)
The tax has multiple offshoots like direct tax and indirect tax and goods and services tax (GST) comes in the second category. Shortfall penalties and interest can be applied for incorrect positions taken in GST returns. These penalties are very punitive, ranging from 20% to 150% of the GST discrepancy.
Financial services, real estate, precious metals are also exempt (0%). Before you can work out your GST total, you need to calculate your sales and income and your purchases and expenses. A registered business in New Zealand not only pays GST but can charge and claim GST.
You cannot get an extension of time to file a GST return so you must file it on time. While the Calculator GST NZ is primarily designed for single transactions, users can easily use it multiple times for different transactions to calculate GST accurately for each one. Yes, the GST NZ Calculator is programmed with the current GST rate in New Zealand, ensuring accurate calculations. However, it’s always good practice to double-check the official government website for any recent changes in the GST rate.
GST In New Zealand (NZ) and who pays GST in NZ
If the per annum income in the last twelve months was $60,000 or above or is expected to be $60,000 or above in the next 12 months, then it is a must to register for GST. In addition, if a business collects GST from customers or sales include GST in products and services, then the business is required to pay GST, even if the income per annum is less than $60,000. Apart from non-resident remote service providers, GST returns may be filed monthly, bi-monthly or six-monthly depending on the level of taxable supplies in a 12-month period.